You can remove the prop shafts & VCU (it sits in the middle) and a Freelander can be used as 2WD - you would need to tell your insurance company and it may fail a mot.
However, this is often done even just to help diagnose where faults lie.
However, there are 2 main reasons for IRD failure.
1 is the VCU going to tight and breaking the rear PTO of the IRD. This is resolved by replacing the VCU and IRD, or running 2WD permanently with removal of the rear PTO on the IRD and replacing it with a blanking plate.
The other is due to a faulty RH front drive shaft taking out its support bearing. This then causes the diff in the IRD to jam and often cracks/smashes the IRD case. The only option here is for a replacement IRD. Usually its necessary to replace the VCU as well once its tested, as you don't want to damage the replacement IRD (or run 2WD with the new IRD).
I recon its difficult to tell which has occurred on your car given what you say.
This is by far the most likely thing that's happened - it also could be the rear diff. If people do a 'full job' of going 2WD they will also remove the rear diff. That means you remove the rear drive shafts as well, but you need to leave the end pieces of the drive shafts in place (in the hubs) or else the wheels fall off!
Pretty sure what I've said is correct.